July 1, 2008
IN THE MATTER OF THE SUSPENSION OF LICENSE OF JOHN M. MEHR.
On appeal from a Final Determination of the New Jersey State Real Estate Appraiser Board.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted June 3, 2008
Before Judges Chambers and Waugh.
Appellant John M. Mehr appeals from the final order of discipline entered by the New Jersey State Real Estate Appraiser Board on June 26, 2007. His primary argument on appeal is that the Board failed to afford him an administrative hearing prior to imposing discipline. He also argues that the Board's factual and legal determinations are not supported by the record. We affirm.
The Board's disciplinary action arose out of a random audit of continuing education compliance performed in 2006. N.J.A.C. 13:40A-5.3 requires the completion of twenty-eight credit hours of continuing education prior to license renewal. It does so by requiring its licensees to comply with continuing education requirements established through a federal program, discussed below, enacted to oversee state regulation of real estate appraisers.
The Board's audit sought documentation from the selected licensees to verify that they had actually taken the required credit hours and distribution of courses prior to renewing their licenses for the 2006-2007 biennial licensing period. Mehr, a certified real estate appraiser licensed by the Board, was one of the 640 licensees, chosen at random, asked to submit proof of compliance.
Mehr's response to the Board demonstrated that he had taken only seven credit hours prior to the renewal of his license on November 20, 2005, twenty-one credit hours short of the requirement. Consequently, at the time he renewed his license in November, he had not complied with the continuing education requirements in terms of timeliness, distribution requirements and number of credit hours.
Following further investigation, the Board initiated disciplinary proceedings by issuing a provisional order of discipline. According to the Board's proofs, which were in the form of certifications attached to the provisional order, Mehr renewed his license on-line. He responded affirmatively to the following question: "Have you completed the continuing education requirement during the past two years?" He also responded affirmatively to a question about whether he had taken a specific type of required course. Neither answer was factually accurate at the time of renewal.
An attachment to the certification of the Board's investigator showed Mehr's license number on the computer renewal record, along with his responses to those two questions. A certification from the Information Technology Manager at the New Jersey Division of Consumer Affairs stated that the on-line renewal screen contained the following language:
I understand that by clicking Submit Answers I am certifying that all the information on this form is true and complete to the best of my knowledge and further acknowledge that if the above information is willfully false, I am subject to punishment and/or disciplinary sanction including license suspension/revocation or the imposition of civil penalties as may be provided by law.
The certification also stated that it was not possible to renew the license on-line without clicking the "Submit Answers" button.
The provisional order, which was issued by the Board on March 21, 2007, proposed that Mehr be disciplined as follows:
(1) suspension of his license pending completion of the required courses, (2) a public reprimand and (3) a civil penalty in the amount of $1,750. The proposed discipline was premised on violations of N.J.S.A. 45:1-21(b), (e) and (h), which provide as follows:
A board may refuse to admit a person to an examination or may refuse to issue or may suspend or revoke any certificate, registration or license issued by the board upon proof that the applicant or holder of such certificate, registration or license:
b. Has engaged in the use or employment of dishonesty, fraud, deception, misrepresentation, false promise or false pretense;
e. Has engaged in professional or occupational misconduct as may be determined by the board;
h. Has violated or failed to comply with the provisions of any act or regulation administered by the board[.]
The provisional order notified Mehr that it would issue a final order in thirty business days "unless respondent requests a modification or dismissal." He was instructed to send any such request to the secretary of the Board and that it should "set forth in writing any and all reasons why said findings and conclusions should be modified or dismissed or arguments in mitigation." The order did not specifically require that the factual aspect of the submission be in the form of a certification or affidavit. However, as noted, the provisional order included two factual certifications supporting the Board's proposed findings of fact.
The provisional order contained the following language with respect to further proceedings:
6. Any submissions will be reviewed by the Board, and the Board will thereafter determine whether further proceedings are necessary. If no material discrepancies are raised through the submission by respondent during the thirty-day period, or if the Board is not persuaded that submitted materials merit further consideration, a Final Order of Discipline will be entered.
. In the event that respondent's submissions establish a need for further proceedings, including, but not limited to, an evidentiary hearing, respondent shall be notified with regard thereto. In the event that an evidentiary hearing is ordered, the preliminary findings of fact and conclusions of law contained herein shall serve as a notice of factual and legal allegations in such proceeding. Further, in the event a hearing is held and upon review of the record, the Board shall not be limited to the findings, conclusions and sanctions herein.
There followed an exchange of letter addressed to the Board by Mehr's attorney and the Deputy Attorney General (DAG) assigned to prosecute the disciplinary action. Mehr's attorney requested dismissal of the disciplinary proceeding. The basic premise of the letter was that there was, at best, a technical violation of the Board's regulations and that such a technical violation did not amount to "professional misconduct" or any sort of "dishonesty." Counsel also argued that such a technical violation did not warrant the proposed level of discipline.
Mehr's counsel also argued that there were extenuating circumstances to excuse or mitigate the technical violation. Specifically, he explained that Mehr's brother had suffered a serious injury in August 2005 and that Mehr had been spending "every minute of his spare time" with or assisting his brother and was consequently unable to complete his continuing education requirements by the end of 2005. Copies of the brother's medical records were attached. In light of all of the above, counsel requested that "an evidentiary hearing be granted to further evaluate" the matter.
The DAG responded and opposed the evidentiary hearing, taking the position that there were "no contested facts." She stated that the Attorney General did not contest the factual assertions about the brother's accident. The DAG also noted that, because Mehr had now provided proof that he had belatedly completed all of the continuing education requirements, the issue of the suspension was moot.
The DAG further argued that it was for the Board to determine whether failure to comply with the continuing education requirements constituted "professional misconduct" under N.J.S.A. 45:1-21(e), noting that the Board had consistently taken that position in the past.
In response to Mehr's contention that there was no basis in fact to find that he had made a misrepresentation or acted dishonestly, the DAG argued that Mehr's representation during the license renewal process that he had satisfied the continuing education requirements, when in fact he had not, constituted misrepresentation, if not fraud. She also argued that Mehr had sufficient time after his brother's injury to request an extension of time to fulfill the continuing education requirements, as permitted by N.J.A.C. 13:40A-5.10, but that he had not done so. The DAG requested the Board to finalize the order of discipline, but without the suspension.
Mehr's attorney responded, asserting that there was "absolutely no evidence whatsoever that Mr. Mehr 'certified falsely' on anything" and that "there is not a stitch of evidence to even suggest that my client engaged in any such dishonest conduct." He also repeated his argument that there were extenuating circumstances.
The DAG again responded. She argued that no hearing was necessary because (1) there was no dispute that Mehr failed to take the required credit hours prior to renewing his license and (2) the certifications attached to the provisional notice of discipline supported the Attorney General's position that Mehr could not have renewed his license without certifying that he had complied with that requirement. She also stated that, if an evidentiary hearing were held, the Attorney General would seek enhanced penalties as permitted by Paragraph 5 of the provisional order of discipline.
Finally, in his third letter to the Board, Mehr's attorney asserted for the first time that Mehr had not renewed his license on-line, but failed to explain whether someone else made the on-line renewal on Mehr's behalf or whether he was asserting that Mehr renewed his license through some other means. As before, there was no certification by or on behalf of Mehr. Counsel repeated his argument that there was only a technical violation and that an evidentiary hearing was needed to determine whether there was anything more serious. Finally, he wrote that he was "shocked and troubled that the State would seek to punish the respondent for simply attempting to clear his name."*fn1
On June 26, 2007, the Board issued its final order of discipline, finding that Mehr had violated N.J.S.A. 45:1-21(b) (e) and (h) and imposing the public reprimand and the $1,750 fine. It did not suspend Mehr because he had completed the continuing education requirements, albeit belatedly. The Board explained its reasons as follows:
Respondent submitted responses dated April 5, 2007, April 24, 2007 and May 4, 2007 requesting a modification to the Findings of Fact, Conclusions of Law and proposed penalty and seeking a hearing. The Attorney General filed responses dated April 20, 2007 and April 27, 2007. Respondent argues that the findings of fact are unproven, although he admits that he did not timely fulfill the continuing education requirement and characterizes it as "a technical violation." However, the Board considered that the Respondent belatedly fulfilled the continuing education requirement and, therefore, has mitigated the proposed penalty of the [proposed order of discipline (POD)] and is not imposing an active suspension.
Additionally, Respondent appears to argue that he did not complete the on-line biennial renewal application, but does not go so far as to assert the manner in which he renewed his license. However, the Board's records indicate that Respondent's license was renewed on-line and that a written biennial renewal application was not received. Further, the Attorney General has provided certifications from Charles Kirk, Assistant Executive Director, and Maria T. Lapolla, Information Technology Manager, that Respondent renewed on-line and answered "yes" to the questions concerning whether Respondent had fulfilled the continuing education requirement, and that by pressing the "Submit Answers" key, he certified that information on the biennial renewal form were true and complete to the best of his knowledge. Further, Respondent acknowledged that if any of the information was willfully false, then he would be subject to punishment and/or disciplinary sanction, including license suspension/revocation or the imposition of civil penalties, as may be provided by law. Accordingly, the Board finds that the Respondent took responsibility for all answers provided in the on-line renewal form. Further, the Board has the right to rely upon Respondent's answers and representations regardless of whether they were transmitted via electronic means or in a written format. But notably, the Respondent falls short of contesting the fact that he renewed on-line; rather, he is merely contesting the proofs which the State relies upon regarding his renewal. Accordingly, the Board accepts these certifications and finds that Respondent misrepresented in his biennial renewal application dated November 20, 2005 that he timely completed the continuing education requirement.
Further, Respondent argues that failure to fulfill the continuing education requirements does not "touch directly upon the performance of his duties as a real estate appraiser" and therefore, does not constitute professional misconduct within the meaning of N.J.S.A. 45:1-21(b). The Board disagrees and finds that continuing education plays an essential and important role in the on-going proficiency of licensees and, therefore, directly relates to, and touches upon, the practice of this profession, as well as the conduct and performance of the licensee.
Finally, the Respondent also argues that the Board should take into consideration the extenuating circumstances in August 2005 to excuse or mitigate Respondent's noncompliance with what he terms a "technical" requirement of the continuing education obligation. The Board took into consideration that Respondent had two (2) years to fulfill this mandate and indeed completed some of the hours in November 2005. Further, the Board is of the opinion that Respondent could have requested an extension, but failed to do so. Therefore, the Board was unpersuaded by Respondent's argument.
The submissions of Respondent and Attorney General were reviewed by the Board on May 8, 2007 and the Board determined that further proceedings were unnecessary and that no material discrepancies have been raised requiring an evidentiary hearing. Respondent concedes that he did not timely fulfill the continuing education requirement and has provided nothing but a bald assertion to refute his on-line certification as to the context of his biennial renewal.
Therefore, the Board has determined that Respondent failed to timely meet the continuing education requirements and, further, misrepresented that he had met those requirements at the time of completing his on-line biennial renewal application. The POD does not allege, nor does the Board find that, Respondent made misrepresentations in his response to the audit. However, the Board has modified the penalty in response to the mitigating information so as not to impose an active suspension because Respondent has demonstrated belated compliance with the continuing education requirements.
Mehr filed appeals from the Board's order.
On appeal, Mehr argues that the Board erred in (1) failing to hold an evidentiary hearing, (2) finding that he violated N.J.S.A. 45:1-21(b) ("use or employment of dishonesty, fraud, deception, misrepresentation, false promise or false pretense") and (3) finding that he violated N.J.S.A. 45:1-21(e) ("engaged in professional or occupational misconduct as may be determined by the board").
Because the Board was not seeking to revoke or refuse renewal of Mehr's license, the Board's disciplinary action against Mehr was not a "contested case" and the provisions of the Administrative Procedure Act (N.J.S.A. 52:14B-1 to -21) were not applicable. N.J.S.A. 52:14B-11; Limongelli v. N.J. State Bd. of Dentistry, 137 N.J. 317, 324 (1993).
Limongelli involved a dentist whose license had been revoked. The Board of Dentistry acted without a hearing to extend the period of time during which he was prohibited from reapplying for licensure. Finding that the matter did not involve a "contested case," the Supreme Court reversed the Appellate Division's determination (Limongelli v. New Jersey State Bd. of Dentistry, 260 N.J. Super. 346 (App. Div. 1992)) that the dentist was entitled to a hearing before an administrative law judge. Limongelli, supra, 137 N.J. at 325-28.
The Supreme Court nevertheless affirmed the remand to the Board of Dentistry, holding that the dentist was entitled to certain procedural rights, because "fundamental fairness" requires a professional board to provide "adequate notice of the charges" and "an opportunity to respond to those charges."
Basic procedural fairness has always been a cornerstone of administrative law in this State: "The right to a hearing before a governmental agency, whose proposed action will affect the rights, duties, powers or privileges of, and is directed at, a specific person, has long been imbedded in our jurisprudence." Cunningham v. New Jersey Dep't of Civil Serv., 69 N.J. 13, 19 (1975). Thus, when an executive agency takes action against a person, procedural fairness will often require that the agency grant that person a hearing. This Court explained what that hearing entails in High Horizons Development Co. v. New Jersey Department of Transportation, 120 N.J. 40 (1990): "Certainly, included among the elements of procedural fairness is a chance to know the opposing evidence and argument and to present evidence and argument in response." Id. at 53. In short, an agency "determination cannot rest upon undisclosed evidence which the parties have had no opportunity to test for trustworthiness or to explain or rebut." Brotherhood of R.R.
Trainmen v. Palmer, 47 N.J. 482, 487 (1966). [Id. at 328.]
In elaborating on the parameters of those procedural rights, the Court said that the "needs of the case will determine the type of hearing required." Id. at 329. It held that "[w]hen an administrative determination may have profound consequences, such as the effective loss of a professional license, administrative due process requires that the one affected by opposing testimonial evidence have the opportunity to cross-examine the witness." Ibid.
In High Horizons Development Co. v. New Jersey Department of Transportation, supra, 120 N.J. at 50, the Supreme Court quoted with approval the following language from 2 Davis, Administrative Law Treatise (2d ed. 1979) concerning the circumstances in which an evidentiary hearing is required: "The law clearly is, at a most elementary level, that because a trial is a process for taking evidence, subject to cross-examination, and because taking evidence is not appropriate except on disputed facts, trial procedure is not required on issues of law, policy or discretion." 2 Davis, supra, § 12.2, at 409-10. The Court also quoted the following: "Due process never requires a trial on non-factual issues. What is needed on such issues is argument, written or oral, not evidence and not trial procedure . . . ." Id. at § 12:1, at 406.
The Board takes the position that Mehr's submissions did not establish a need for a hearing for two reasons. First, there was no genuine issue of material fact that Mehr had failed to complete the required number of credit hours before he renewed his license in November 2005 based upon the documentation submitted by Mehr himself. Despite all of the language about "technical violations" in his attorney's letters, Mehr really had absolutely no factual basis to argue that he had complied. Indeed, the request for mitigation based on his brother's illness was premised on his having been so involved with his brother's medical condition that he did not have the time, prior to the renewal of his license, to take the required number of continuing education credit hours. Consequently, Mehr was not entitled to an evidentiary hearing on that issue.
Second, the Board argues that the certifications annexed to the provisional notice of discipline established that Mehr renewed his license on-line and that he could not have done so without clicking the "Submit Answers" button, thereby certifying that his inaccurate answers were true. Despite the fact that Mehr denied those facts through counsel, the Board argues that it did not abuse its discretion in concluding that there was no genuine issue of fact requiring a hearing because Mehr failed to submit certifications setting forth contrary facts and never explained his belated assertion that he did not renew his license on-line.
On appeal, Mehr has not explained why he never submitted a certification in connection with his attorney's three letters to the Board. It was clear from the argument in the DAG's initial letters that the Attorney General was urging the Board not to hold a hearing because Mehr had not supported the assertions of fact made through counsel. In addition, Mehr never supported or even explained his belated assertion that he did not renew the license on-line, nor did he claim that the renewal was unauthorized.
Even in a "contested case" before an administrative law judge, N.J.A.C. 1:1-12.5(b) permits summary disposition when there are no contested facts. Under the circumstances of this case, we are satisfied that the due process principles enunciated by the Supreme Court in High Horizons and Limongelli permit the determination of a case such as this one without an evidentiary hearing. While the discipline imposed on Mehr includes a fine and a public reprimand, it does not even involve "the effective loss of a professional license," as was the case in Limongelli. Mehr had the "fundamental fairness" required of a professional board, i.e., "adequate notice of the charges" and "an opportunity to respond to those charges." Had Mehr supported the bare factual assertions of his attorney with one or more certifications raising genuine issues of material fact, we would perhaps take a different view of the propriety of deciding the case without an evidentiary hearing.
Having determined that the Board had a sufficient factual basis to find that Mehr failed to fulfill the continuing education requirements prior to renewal of his license in November 2002 and that he misrepresented that he had done so in his on-line application for renewal, we must address the issue of whether that conduct can properly be characterized as "professional misconduct" under N.J.S.A. 45:1-21(e).
New Jersey courts "generally afford substantial deference to the actions of administrative agencies," such as a professional board, "because of the expertise and superior knowledge of agencies in their specialized fields." In re License Issued to Zahl, 186 N.J. 341, 353 (2006)(internal quotation and citation omitted); In re Carter, 191 N.J. 474, 483 (2007).
Unlike the statute involved in the Washington State case cited by Mehr (Haley v. Medical Disciplinary Board, 818 P.2d 1062 (Wash. 1991)), N.J.S.A. 45:1-21(e) does not itself define "professional misconduct," but specifically leaves that determination to the Board. The Board argues persuasively that the stringent requirements of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (101 P.L. 73), which establishes the minimum education, experience and examination requirements for real property appraisers to obtain a state certification or license, supports its determination that failure to comply with the continuing education requirements of N.J.A.C. 13:40A-5.3 constitutes "professional misconduct."
The following excerpts from the "Policy Statements Regarding State Certification and Licensing of Real Estate Appraisers," issued by the Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council, support the Board's position:
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended ("FIRREA") entitled the "Real Estate Appraisal Reform Amendments," established the Appraisal Subcommittee of the Federal Financial Institutions Examination Council ("ASC"). The ASC consists of representatives appointed by the heads of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the National Credit Union Administration ("Federal financial institutions regulatory agencies" or "Agencies") and the Department of Housing and Urban Development.
The ASC, among other things, is charged with monitoring the certification and licensing programs for real estate appraisers in each State to determine whether the State's policies, practices and procedures are consistent with Title XI and enforcing the State's compliance with the requirements of Title XI. This statute also requires the ASC to maintain a national registry of State licensed and certified appraisers and to ensure that each State appraiser certifying and licensing agency ("State agency") transmits to the ASC a roster of State certified and licensed appraisers who are eligible to perform appraisals in federally related transactions, along with an annual registry fee. States may establish and maintain procedures for certifying, licensing, supervising and disciplining individuals who are qualified to perform real estate appraisals in connection with Federal financial and public policy interests, including a code of professional responsibility as evidenced by the Uniform Standards of Professional Appraisal Practice ("USPAP"), as adopted by the Appraisal Standards Board of the Appraisal Foundation ("ASB"). Tile XI, and other Federal statutes and regulations requiring the use of State certified or licensed appraisers, necessarily rely on States to perform their real estate appraiser related duties in a responsible manner.
5. Continuing Education - States may accept education-related affidavits from certified appraisers for credential renewal. Each State accepting affidavits for certified appraiser credential renewals must establish a reliable means of validating the affidavits, i.e., validation procedures.
a) Validation Procedures - For the purposes of this Policy Statement, validation procedures need to achieve at least two goals. First, the procedures must include a prompt post-approval audit of an adequate number of affidavits to have an acceptable chance of identifying appraisers who fail to comply with Federal and State law. The sample must include a reasonable representation of the appraiser population being sampled. Second, the procedures must be structured to permit acceptable projections of the sample results to the entire population of subject appraisers. It is necessary to achieve both goals to have reliable validation procedures. [Page 26 (emphasis added).]
c) Auditing and Enforcement Requirements -
The State must audit the continuing education-related affidavit for each certified appraiser selected in the sampling procedure. The following minimum standards apply to these audits:
· Each affidavit audit must be completed within 60 days from the date the renewed credential is issued;
· The State must determine that the education courses claimed conform to [Appraiser Qualifications Board (AQB)] Criteria, and that the appraiser successfully completed each course;
· When a State determines that a certified appraiser does not meet the AQB's minimum continuing education criteria, the State must take appropriate action in the most expeditious manner to suspend the appraiser's eligibility to perform appraisals in federally related transactions. Also, the State must notify the ASC expeditiously, by email or fax, of that fact so that the appraiser's record on the National Registry can be updated appropriately[.] [Page 27 (emphasis added).]
Because failure to complete the required continuing education requirements can lead to the suspension of an appraiser's eligibility to perform appraisals in "federally related matters," we conclude the Board did not abuse its discretion under N.J.S.A. 45:1-21(e) in classifying such a failure as "professional misconduct." In addition, the Board clearly had the discretion to conclude that it is "professional misconduct" for a licensee to make a "misrepresentation" (N.J.S.A. 45:1-21(b)) concerning such compliance in connection with the on-line renewal process.*fn2 In light of the entire record before the Board, the discipline imposed on Mehr was not so disproportionate under the circumstances so as to be "shocking to one's sense of fairness." In re License Issued to Zahl, supra, 186 N.J. at 354 (internal citations and quotations omitted).